Standing Committee E

[Sir David Madel in the Chair]

Health and Social Care Bill

Clause 29 - Pilot schemes

John Denham: I beg to move amendment No. 206, in page 30, line 1, leave out from `Chapter' to second `services' in line 2 and insert `—
``pharmaceutical services'' means services of a kind which may be provided under section 41 of the 1977 Act, or by virtue of section 41A of that Act; and
``local pharmaceutical services'' means such pharmaceutical services (other than practitioner dispensing'.

David Madel: With this it will be convenient to discuss the following amendments: No. 39, in page 30, line 2, leave out `(other than practitioner services)'.
 Government amendment No. 207. 
 No. 280, in page 30, line 4, leave out from beginning to end of line 8. 
 Government amendment No. 220.

John Denham: Clause 29 is the first of 13 clauses dealing with local pharmaceutical services. It may be helpful if I briefly set out how those clauses relate to each other.
 Clause 29 establishes a pilot scheme for a local pharmaceutical service. Clause 30 introduces schedule 2, which deals with the process by which health authorities develop pilot schemes and submit them for approval. Clauses 31 and 38 deal in different ways with the relationship between local pharmaceutical services pilot schemes and existing arrangements. Clause 32 deals with the review of pilot schemes, and clause 33 with their variation and termination. Clause 34 deals with the legal basis under which pilot scheme agreements can operate, while clause 35 makes provision for meeting preparatory costs. 
 Clause 36 deals with prescription charges, and clause 37 with the status of pilot schemes in relation to other NHS legislation. Clauses 39, 40 and schedule 3 deal with establishing local pharmaceutical services as a substantive and permanent part of NHS arrangements following the pilot stage. Clause 41 provides powers to make further provisions in relation to that. 
 Many of the provisions in those clauses are modelled directly—sometimes word for word—on the equivalent provisions for personal medical and dental services introduced under the National Health Service (Primary Care) Act 1997. Local pharmaceutical services are a key element of our programme for pharmacy set out in ``Pharmacy in the Future'', which we published in September. 
 I think that the Committee may agree that, for too long, the NHS has underused the skills and expertise of pharmacists. ``Pharmacy in the Future'' demonstrates for the first time that the Government are committed to putting that right. Community pharmacies provide a necessary and well-valued service throughout the country. Studies have repeatedly shown that patient satisfaction with dispensing services is high. People have a growing recognition of what else community pharmacists can do, not least in helping people to deal with minor illnesses and make better use of their medicines.

Philip Hammond: Will the Minister place on record the value to local communities of GP dispensing services in areas not served by pharmacies?

John Denham: Dispensing GPs do indeed provide a valuable service, particularly in areas where community pharmacy services are not available. Although the general preference is for the full range of pharmacy services to be available, dispensing GPs provide a service valued by patients that would not otherwise be available.
 It is generally recognised that the current contractual framework for community pharmacy needs improvement. The national framework fails to provide sufficient incentive, and does not properly reward good quality and service at the expense of those who provide only the bare minimum. We want to reform that national framework. At the same time we want to provide a more flexible alternative. There are already many good examples of local projects under which pharmacists provide extra services on top of the national requirements. What is missing at the moment is a proper framework for local agreements to bring all the elements into a coherent whole, tailored to specific local needs. Local pharmaceutical services pilot schemes will provide that. 
 As with personal medical services, the legislative framework in the Bill is deliberately flexible and open. The emphasis is on local imagination and innovation, free from the constraints of the rigid national contractual framework.

Philip Hammond: We are very supportive of the idea of local flexibility, free from the constraints of rigid national contracts. Will the Minister assure the Committee that the local pharmaceutical services pilot scheme will not go along the route followed by personal medical services. The latter started by emphasising local flexibility and freedom from the rigidity of national contracts, and has moved in the direction of more rigid—or, as the Government would say, more uniform—national contracts. Can he assure us that it will remain a locally flexible scheme?

John Denham: PMS has been a significant success for the Government, with 22 per cent. of all GPs operating under PMS from April and with more to come forward next year. As our experience of PMS, and that of GPs, grew, we were able to combine local flexibility with some essential core elements in the PMS contracts, and it is interesting that that did not dissuade GPs from signing up to them. It would be wrong to rule out core elements in local pharmaceutical services contracts. We must proceed in the light of experience, and the emphasis will be, as it is with PMS, on the development of schemes that are appropriately tailored to local needs and to providing additional local services.
 We look forward to schemes that combine traditional dispensing services with greater levels of pharmaceutical care. Pharmacists in such schemes would not just supply medicines, but actively manage them. They would work with GPs and primary care services to help to ensure that patients get the right medicines and the help they need to make the best use of them. That could include the periodic review of individual patient's medication or even domiciliary visits to discuss and assess any problems they are having with their medicines. It could involve a continuing role in therapeutic monitoring for people taking warfarin, for example, or help for asthmatics with inhaler techniques. In many local schemes pharmacists provide enhanced services, and there are opportunities for many more. 
 By allowing pilot schemes to include other services, pharmacists may be used as a base for other activities. Health authorities are already involving pharmacies in health education campaigns. For example, pharmacists provide smoking cessation counselling or particular services for drug misusers. Some pharmacies could be a convenient local centre for chiropody or similar services. 
 The Government have been deliberately open about who may be parties to pilot schemes. Although existing independent contractors will no doubt be at the forefront, we have not ruled out others being involved if that is the best way of meeting local needs, including NHS trusts and primary care trusts. We could also have schemes in which the pharmacy owner contracts for the dispensing service to provide the facilities, but it is a named individual pharmacist who contracts directly to provide the associated pharmaceutical care. 
 Participation in pilot schemes will be voluntary and discretionary. For pharmacists and health authorities that choose to make use of the new framework, LPS means exciting opportunities to provide better and more cost-effective services to patients. We have shown what can be achieved with personal medical services and with personal dental services, the time is right to achieve the same in pharmaceutical services. 
 Our amendments to the clause improve the drafting of the definitions. Amendment No. 206 makes it clear that local pharmaceutical services means services that may be provided under the existing legislative framework with one exception: that is, dispensing by doctors and dentists to their own NHS patients. That exception does not imply any desire to exclude dispensing doctors from the opportunity to take part in innovative local contracts. It is simply that the opportunity to do so already exists within personal medical services, and it would be confusing to include that in local pharmaceutical services as well. 
 Amendment No. 207 clarifies that the exception applies to all GPs, whether performing general or personal medical services. In the same vein, amendment No. 220 ensures that the definition in paragraph 1(3) to schedule 3, which deals with post-pilot arrangements for LPS, is consistent. 
 I shall anticipate amendments Nos. 39 and 280 tabled by the rt. hon. Member for North-West Hampshire (Sir George Young), which would put dispensing doctor services back within the scope of the local pharmaceutical services pilot schemes. I hope my explanation of their exclusion will reassure the rt. hon. Gentleman that the amendments are unnecessary. The Government have sought to avoid confusion and duplication of provision rather than exclude dispensing doctors from innovative approaches to dispensing.

George Young: I shall speak to my amendments Nos. 39 and 280, and also respond to some of the more general points that the Minister made. Amendments Nos. 39 and 280 are about equality of opportunity between different groups of GPs. Deleting ``other than practitioner services'' and subsection (9) on the definition of practitioner services would give GPs providing general medical services the same opportunity to take part in LPS as GPs who provide personal medical services. I do not see any reason to create a differential between the two types of practitioner. It would be perverse for the opportunity to be made available to one group of GPs, but not to the vast majority.
 Under the clause, it will be possible to provide additional services such as diagnostic testing and investigative procedures in an LPS scheme. A GP may wish to apply to provide those services, and it is important that a patient's care is properly co-ordinated and integrated. I was not wholly persuaded that because GPs could apply under a different scheme, they were excluded from taking part in this one. To avoid any future problems LPS pilot schemes should be introduced with care, to ensure that there is equity in the way in which rules are applied. The Minister's amendments have dealt with some of the concerns of the British Medical Association's general practitioner committee, and we will discuss amendment No. 219 later. 
 I would like to touch on the issue of GP dispensing, which was raised by the Minister and which my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) mentioned in his intervention. My amendment is about the ability of GPs to take part in the new arrangements. The Government seem to overlook the importance of GP dispensing. Some 3.5 million people get their prescriptions not from the local pharmacist, but from their GP. There are 4,400 dispensing doctors in the UK. Committee members may know that there has been a long history of conflict between pharmacists seeking to establish new community pharmacies, and GPs who act as dispensing doctors, as well as between pharmacists with established pharmacies and GPs seeking to become dispensing doctors. Progress has been made between the professions towards stability. 
 The reason for my interest in the matter, and for my amendment, is something that happened in my own constituency in north-west Hampshire. In Tadley, 2,000 patients used to get their medicines dispensed at the Woodland GP practice. There were clear advantages in that for them. It avoided the need to visit a chemist as well as a doctor. All the patients lived at least a mile from a chemist. The area, which is predominantly rural, was designated a controlled area, which allowed the GPs to dispense. The GPs and their patients were happy. 
 Then someone in the health authority, who apparently had nothing better to do, decided to re-designate part of the practice area as urban rather than rural. There is no definition of a rural area—it is a subjective exercise. However, the notion that because someone in the health authority re-designates the area, my constituents put down the White Paper on rural affairs and pick up the White Paper on urban matters, is optimistic. The important thing is that, without the patients or the community health council being consulted, the machinery was activated to stop the GPs dispensing. That had implications for all the patients, because the income from dispensing funded additional equipment such as an ultrasound scanner. 
 In a rather Kafkaesque process involving the pharmacy application board, Baughurst Common was designated as urban and not rural. That was that; the area was no longer controlled and chemists could then dispense there, because they can dispense in both controlled and uncontrolled areas. However, GPs can dispense only in controlled areas. I took the matter up with the then Minister of State, who is now the Secretary of State, and shared my problem with him. He wrote back on 27 May 1998. His letter states: 
 I am sorry to hear that the change of classification of Baughurst from a controlled to an uncontrolled area, may jeopardise the number of services the Woodland Practice currently provide to patients at their surgery. However, the statutory responsibility for handling applications for the provision of pharmaceutical services rests with the Health Authority and, on appeal, to the Appeal Authority. Ministers have no power to intervene, and indeed, it would be inappropriate to do so for individual cases. 
The Minister may have had a good alibi then, but with the fresh measures and the relevant clauses now before the Committee, he has no alibi. If he believes, as I do, that in the circumstances that I have set out it was wrong to deprive patients of a one-stop shop because someone wanted to open a new pharmacy, I ask him to say so and to undertake to amend the Bill if it does not have the flexibility that I want. 
 I yield to no one in my admiration for community pharmacists. As the Minister said, their skills have for far too long been undervalued, their informal advice can save people a visit to a GP and the dispensing income can keep open a chemist's shop that would not be viable without that income flow. We need a balance, but the Department's literature on this point is unbalanced. The Minister referred in his opening remarks to ``Pharmacy in the Future''. I could find no reference to dispensing GPs there. A reference at paragraph 2.9 misses the point. It states: 
 ``Patients find it convenient to have a community pharmacy very close to their GP's surgery.'' 
Yes they do, but they might find it even more convenient if the GP did the dispensing. Paragraph 1.8 comes close to my ideas in referring to ``one-stop primary care centres'', with the pharmacist and GP ``under one roof''. I am in favour of that, but it is not quite the same as GPs doing the dispensing. 
 Paragraph 1.4 of the document states that people should get their medicine 
 ``at a place of their choosing'', 
but, as I have explained, the present system does not permit that, if the place of their choosing is withdrawn. 
 I am slightly more worried about paragraphs 4.13 and 4.14. Perhaps the Minister will reassure me when we consider schedule 2. A free for all is apparently envisaged. I do not mind pharmacists opening businesses if they want to, but I object to a pharmacy opening with the consequence that a GP must stop dispensing. The omission that I am concerned about also occurs in the document that the Minister circulated to the Committee, ``The Health and Social Care Bill: Local Pharmaceutical Services''. There is a passing reference at the end, at paragraph 4.12.1, but paragraph 4.12.3 states: 
 ``The Government has decided not to include dispensing doctor services within LPS schemes themselves.'' 
The explanatory notes state at paragraph 142: 
 ``The parties to pilot schemes may therefore include, amongst others, individual pharmacists, retail pharmacy businesses and dispensing appliance contractors.'' 
There is no reference in the explanatory notes to GPs. It would appear that they cannot play the game in question. 
 I should like a clearer response from the Minister to the question put to him by my hon. Friend the Member for Runnymede and Weybridge. What is the role of dispensing doctors within the Government's vision of local pharmaceutical services? Can we have an assurance that there will be no repetition of what I described happening in my constituency? Will there be a level playing field between GPs who want to take the route that I have outlined and others? Perhaps the Minister can bring us up to date with the proposed regulation changes. I understand that the Pharmaceutical Services Negotiating Committee and the general practitioners committee of the BMA have been engaged in discussions to try to resolve the long-standing disputes. However, I understand that the regulations need to be changed to bring stability to the world of rural dispensing. 
 I hope that, if not in response to the present debate, then at some time in our proceedings, we shall be told more about dispensing doctors than we have so far and be given a clear assurance about what happened in Tadley.

Philip Hammond: I draw the Committee's attention again to my registered interests in relation to commercial property since, self-evidently, many pharmaceutical services are provided from commercial property. I am grateful to the Minister for providing some background to part II of the Bill. It will not have escaped his notice, or that of his grateful officials, that there are a relatively modest number of Opposition amendments to part II. That does not mean that there are not important issues to discuss, but it is fair to say that this part of the Bill contains no burning political matters likely to cause huge divides. Instead, we want to explore a series of technical and operational issues.
 We have not seen a deluge of representations from the relevant establishment, which tends to suggest that it is broadly happy with the direction that the Bill proposes. It is our duty not only to represent the concerns of the establishment, be it medical or pharmaceutical, but to consider issues that may affect people who do not have powerful bodies to articulate their interests. I hope that over the next few hours we can probe the Minister on the issues and have a genuinely constructive debate, exploring what will happen as a result of the clauses. They set out a framework, but they are not precise—they cannot be expected to be—about what will happen in practice. 
 We support the concept of broadening the way in which pharmaceutical services can be provided. We all agree with what the Minister said about pharmacies being an under-used asset in the primary health care delivery system, whether we are objectively considering the professional capacity of pharmacists, which is so evidently not being used, or models of the role of pharmacies in other European countries. 
 Has the Department of Health undertaken any formal work to gather evidence of specific failures in the current arrangements? The Minister said in his opening remarks that the new arrangements would enable the focus to be on quality rather than the provision of bare minimum services. The explanatory notes and other documents give a slightly different emphasis, suggesting that the changed arrangements will enable pharmaceutical services to be extended into areas in which coverage is inadequate. 
 How does the Minister perceive the balance between the need to achieve greater coverage and the need to improve the quality and depth of services offered? He might say that both are important, but there would need to be different arrangements to extend coverage into inadequately covered areas. Several of my remarks this morning will go to the heart of the distinction between encouraging existing providers with premises and facilities to change how they work—they will have financial incentives, as that is what private sector players respond to—and achieving provision of services where there is currently inadequate provision. I will deal with that more specifically later. 
 Will the Minister tell us how the provisions fit into the long-established and broad debate about the role of dedicated small community pharmacists versus the role of large multiple retailers, especially in supermarkets? I also want to know about retail maintenance of over-the-counter medicine. The Minister did not touch on the matter, but I am sure that he would acknowledge that the pharmacy contract underpins the viability of many retail pharmacies, which provide a broad range of services, such as over-the-counter medicines and baby products. We must explore how to ensure— as the financial incentives currently delivered through the part II arrangements are replaced by the local pharmaceutical arrangements—that we do not discourage people who currently deliver, as incidental to their dispensing contract, an over-the-counter service. We need to be careful that they do not become more of a service provider and less of a retail operation because of the different nature of their operations. 
 It would be useful if the Minister said something about the retail price maintenance and the issues of community pharmacy versus supermarket, and the cross-subsidisation between over-the-counter products protected by retail price maintenance and the services provided by community pharmacies. Implicit in the Bill is the notion that health authorities will pay for the incidental benefits of community pharmacists and for the role they play in the primary health care system. At present, to some extent, that role is financed by cross-subsidisation from the retail price maintenance on some over-the-counter products. 
 I appreciate that the Minister has talked about local flexibility and that different models will exist in different areas. However, I hope he will not shelter entirely behind that and claim that he has no idea how those matters will operate in practice. That would alarm the Committee. The Government must have some models in mind. Does the Minister envisage a system of direct negotiable payments—as it were, contracted amounts over and above the remuneration pharmacists receive for their routine dispensing activity? That might be the way to secure provision in areas where it is sparse and to some extent that is already reflected in the essential small pharmacies premium arrangements. 
 Can the Minister tell us what role he envisages for NHS trusts and primary care trusts in the model? There is a competition issue here. At the moment, pharmaceutical services are provided almost entirely by private sector contractors. If in future NHS trusts and primary care trusts are to have a significant role, the issue will arise of the appropriateness of public sector bodies competing—perhaps head on—with private commercial providers. The Minister must recognise that the Bill could lead to competition issues and practices that are incompatible with the open and free competition that we expect to see in a retail market. The consequences could be that NHS trusts and primary care trusts that dip their toes in the local pharmacy market end up, perversely, driving out commercially based providers. If those public sector bodies then found themselves unable or unwilling to continue providing the service, the result would be gaps in the market. 
 Perhaps I have not been diligent in doing my homework.

David Jamieson: Hear, hear.

Philip Hammond: The Government Whip is, I think, rather uncharitable. This is the first clause of the morning. My mugging up might be a little scanty on the later clauses, but I pride myself on usually reading the background notes to at least the first clause of the day.
 Will the Minister clarify who is the relevant authority? I assume that it is either the Secretary of State of the Welsh Assembly. The Minister nods. My right hon. Friend the Member for North-West Hampshire spoke about the Secretary of State having an alibi. The alibi in this case is the relevant authority. It will be the Secretary of State in England; but I cannot find a definition in the Bill. It would be useful for the Minister to point us to the place—it may be in other legislation—where relevant authority is defined. I assume that it is not defined in the base statute because the Welsh Assembly had not been created then. 
 I should place on record that we warmly welcome the idea that a community pharmacy could provide a wider range of services than the simple dispensing of medicines. The Opposition have had many discussions with bodies representing community pharmacy and pharmacy retail chains about what they might be able to do. It is clear that their walk-in capability would far exceed the Government's most optimistic ambitions for their own walk-in centres programme. Thousands of High street walk-in centres are waiting to be used, admittedly for a limited range of activities, although diagnostic testing is an obvious one that springs to mind. We have also had discussions with one or two pharmaceutical chains about the practicality of undertaking PSA prostate screening tests at retail pharmacies if the test proved effective and if it were decided to introduce a broad screening programme along those lines. 
 We envisage an increasing role being placed upon general practices in the overall scheme of health delivery. It is, therefore, important that the process passes on down the line. As we try to move procedures out of the secondary sector into the surgery, we shall have to help GPs shed some of their more mundane tasks. If pharmacists can take some of the load, it would be a sensible way to proceed. 
 In conclusion, I share the concerns expressed by my right hon. Friend the Member for North-West Hampshire when speaking to amendments Nos. 39 and 280. He said that we have no reason to draw a distinction, in terms of their ability to participate in such arrangements, between doctors delivering PMS and doctors delivering GMS. I was not persuaded by the Minister's response and I hope that he will reflect further on the matter. He might admit to the suspicion that the Department of Health has, at official level if not at ministerial level, shown a sense of hostility towards dispensing doctors, perhaps because they were thought to be more expensive because of a propensity to dispense at a different rate from non-dispensing doctors, although I have seen no evidence to support that. It would help if the Minister answered the debate in the context of his Department's corporate view on dispensing doctors and their place in the overall scheme.

Peter Brand: We very much welcome this part of the Bill. The change is long overdue. Primary care does not mean general practitioner services but a team in which pharmacists play an important role, as do the other professions mentioned later, with their extended prescribing rights. We need to discuss accountability, but I imagine that we will do so on clause 42.
 I welcome the implied flexibility of pilot schemes. As the hon. Member for Runnymede and Weybridge pointed out, it is important that the arrangements to provide a broad range of services can be truly local. Some of the reward structures may have to be tailored to specific pharmacies in specific locations. Supermarkets, which can cross-subsidise with ease, are not alone in having different requirements. The large pharmaceutical chains have much greater opportunities to absorb losses and are less dependent on such contracts than the community pharmacies that for too long have subsidised the NHS with shopkeeping abilities. Some community pharmacies that provided excellent services have been lost to the NHS as they did not have the opportunity to expand their commercial activities. 
 Pharmacists—the dispensers of drugs—are important members of the clinical team. Although I appreciate the fact that it is impossible or impractical to have a separate pharmacist from the prescribing GP in some parts of the country, such an arrangement should be encouraged as the norm. My practice is three miles away from the nearest pharmacies, but we deliberately decided not to dispense because we value the second opinion, the safety check and the extra professional input that one can receive from pharmacists having a fresh look at prescriptions. 
 One of the problems that we faced—I hope that it can be tackled under the private schemes—was that we effectively had to act as an agent for pharmacies. We have provided a pick-up and delivery service for our patients on the pharmacies' behalf, the cost of which comes out of scant staff resources. In this new, joined-up age, it would be useful if the Government were to consider how the services are delivered, so as to promote flexibility. 
 I should like the Minister to tell us what will happen when pilot schemes become permanent. Those who go to sea often use pilot services, but when they arrive they dispense with their pilots. I hope that we will not be in a state of perpetual flux, as is implied by the term ``pilot schemes''. The Minister suggested that some of the schemes will become permanent, but we might consider the terminology. Any provider of health services needs to be able to plan and needs a degree of confidence in the future that is not necessarily implied by the term. 
 The hon. Member for Runnymede and Weybridge touched on the issue of who else could dispense. Although I recognise his concerns about the primary care trust or an out-of-hours co-operative not undermining the commercial activities of pharmacists, that is a two-way process. When I was last on call for our local co-operative on a bank holiday I found that only two pharmacists, 20 miles apart and open for an hour a day, were dealing with the medical needs of 200,000 people. That was clearly unacceptable.

Philip Hammond: Just to be clear, my concern was that if public sector bodies providing dispensing services were to drive out of business community pharmacies that, in addition to providing dispensing services, had provided a wider range of over-the-counter and non-medicinal provision, that would be a considerable loss to some isolated communities.

Peter Brand: I take that point. My example concerned the need to explore the provision of out-of-hours pharmaceutical services if it was not possible for them to be guaranteed locally through contracts with pharmacies—perhaps through a hospital-based pharmacy. Our out-of-hours call-in centre is based on the local hospital pharmacy. It seems ridiculous to send people who live at the other end of the island 10 miles for their pills.
 The details need to be explored. I suspect that most of them will be dealt with by regulations. However, I hope that the Government will take the opportunity to secure the future of community pharmacies, although I appreciate that there is a significant problem in their negotiation. Providing support for all pharmacies is a bit like the common agriculture policy. I should not like one set of subsidy regulations or one type of contract to be made available, to suit both Boots the Chemist, with its enormous range of activities, and my local man in the high street of Sandown, who must struggle on his own. I hope that we shall aim not for administrative convenience but for true local flexibility.

John Denham: We have had a useful and constructive debate and I shall try to reply to all the points that have been raised. I am sure that right hon. and hon. Members will pick me up on any that I miss.
 We shall of course discuss later the way in which existing pharmacies need to be taken into account in the development of LPS schemes. I hope that the Committee will agree to focus on that when we reach the relevant Government amendment. The key consideration must be to ensure that services to patients are protected and enhanced. In practice, broader issues may need to be taken into account, but that must be our starting point. 
 It was suggested during the debate that pharmacies subsidise the national health service. I am not sure that I accept that. In our view, pharmacies are fairly and appropriately remunerated for the NHS service that they provide. The number of pharmacies providing such services has remained pretty stable for more or less a decade. There has been some shift in distribution. Relatively few pharmacies open or close each year, but those that open tend to be more than 500 m from the nearest pharmacy, which suggests some opening out of distribution and less concentration in a few small areas. The trend is slight but probably in the right direction.

Peter Brand: Does the Minister recognise that although there may not have been a shift in numbers of pharmacies, quite a number of licences have been transferred from community pharmacies to superstores, which has distorted the relevant pharmaceutical market considerably? I am sure that the Minister will recognise too that pharmacists have extended their role without a contract to do so, and that that activity, outside their purely dispensing responsibilities, is subsidising the national health service to a great extent.

John Denham: I shall come later to the issue of additional services, which was also raised by the hon. Member for Runnymede and Weybridge. However, I would not necessarily accept that that was a NHS subsidy; it is part of the operation of the community pharmacy. The patterns of ownership may change, but the basis of our approach must be on whether the patient is receiving a quality service.

Philip Hammond: The Minister seems to have missed the point made by the hon. Member for the Isle of Wight (Dr. Brand). The current arrangements remunerate a pharmacist for dispensing. Whether he spends his time giving good advice to patients who may then buy nothing or whether he refuses to do so does not alter his remuneration.

John Denham: No member of the Committee would accept the unfortunate caricature that pharmacists, with their professional training and responsibilities, simply dole out medicine without giving advice. The royal society guide makes it clear to pharmacists that it is their professional responsibility to give advice. We need to be careful not to caricature them.

Philip Hammond: They are not paid for it.

John Denham: Remuneration is linked to dispensing, but that does not obviate pharmacists, who are paid as professionals, from their professional responsibilities.

Michael Jabez Foster: Will my hon. Friend give way?

John Denham: I shall give way when I have completed the point.
 We have signalled in the pharmacy strategy document that we want to address the shape of the national contracts. That is common ground across the Committee. We would all like more direct emphasis on the quality of services. I want to avoid our going down in history as the Committee that somehow agreed that pharmacists are not bothered professionally about quality. We need to change the way in which the contract operates.

Michael Jabez Foster: Is that not a matter for the market? In Hastings, one pharmacist failed to give advice and now people do not go to him. Pharmacists who give good advice they build up their trade and do well as a consequence.

John Denham: My hon. Friend is right. Many of the additional services provided by pharmacists have the beneficial effect of building up customer loyalty.

Philip Hammond: I am grateful to the Minister because I would not like to be recorded as suggesting that pharmacists do not provide advice. The hon. Member for Hastings and Rye (Mr. Foster) made a good point. Not everybody has access to competitive pharmacists and can decide where to take their business.
 The point relates not to medicines being dispensed against prescription, but to the advice—for which they are not remunerated—that pharmacists give in relation to minor ailments and over-the-counter products, including medicines. The fact that they give advice freely and that becomes part of the local culture relieves to a significant extent the burden on GPs of dealing with minor conditions. I would be grateful if the Minister acknowledged that. If he does, I in turn will acknowledge that the Government amendments seek to address precisely that point, so there is no difference between us.

John Denham: Of course, the hon. Gentleman is absolutely right. It is acknowledged more effectively than anything I can say in the Committee by the winter campaign that was run by the Department together with the professionals—including pharmacists—urging patients to make full use of community pharmacists for minor ailments in order to avoid unnecessarily visiting their GPs. Millions of pounds were invested in that campaign precisely to recognise the skills of pharmacists, so we are at one on that.
 We must be clear about the Government's approach on the important issue of dispensing doctors. We acknowledge the valuable role of dispensing doctors in areas where a pharmacy service are not available. The hon. Member for Isle of Wight, who is a GP, made the point—more tellingly than I could—that typically, dispensing doctor services do not directly employ the skills of a pharmacist. We would prefer patients to have the full range of primary care skills, including those of pharmacists, available to them. Dispensing doctors rarely employ qualified pharmacists. Indeed, they do not usually sell over-the-counter medicines or offer general advice on health or health care in the way in which a pharmacist would. Our view is that wherever it is sensible, patients should have access to GPs and community pharmacists, so that they can benefit from the complementary skills and expertise of both professions. 
 As the right hon. Member for North-West Hampshire has noticed, nothing in the Bill will directly change the existing rules for the award of dispensing rights in rural areas. It is, as he has said, a separate, complex and hotly debated subject in its own right. I am advised that the rules date back to a compromise between the professions that was worked out in 1911. The most recent change to the rules was made in the late 1980s. We are reluctant to make changes to those rules that would simply renew the dispute between the two professions, particularly when we are focusing on getting them to work together. The right hon. Gentleman asked me about the current state of play on the issue. The pharmacy and medical professions have, on their own initiative, been discussing joint proposals for changes to the rural dispensing rules. We have said that we will consider those proposals very carefully, but, at the request of the two professions, I shall not go into any further detail on that matter. 
 The hon. Member for Runnymede and Weybridge asked about the reference to ``coverage'', and whether it was geographical or service-based. As he said, it includes both those considerations. Where services are unavailable, LPS may well be the best vehicle for delivering new services. Last week we discussed the need to get more doctors into under-doctored areas. It is possible that an LPS scheme would be an appropriate way of working with the PMS measures to get new pharmaceutical services into deprived estates. There are other areas, such as new housing developments, where that might be the right way forward. 
 Geographical coverage is good in most of the country, but we want to improve the quality of pharmaceutical services in many places. That might mean coverage through measures such as medicines management, prescribing reviews or the development of better out-of-hours services. It could mean the development of targeted services. For example, under LPS a narrow and specific service could be provided for drug users. All of those services come under ``coverage''. It is a matter of delivering better services to new people.

Philip Hammond: There is a conflict between the objectives of the legislation. I do not want to jump ahead in the Committee's consideration of the Bill, but clause 33 deals with the ability of the relevant authority to direct a health authority to wind up or modify a scheme. That implies that the schemes cannot be based on firm, long-term contractual arrangements with private sector parties. While the scheme might be fine for improving quality and remuneration arrangements, it is difficult to tell how it could be used to provide a physical presence—premises for dispensing—in an area that lacks one.

John Denham: We are slightly anticipating a later debate. It will be necessary to make provision for the return of an LPS scheme to the national contract arrangements, rather as assurances have been given about the return of personal medical services GPs to general medical services. Different approaches will be necessary, because we would not want LPS to become a loophole in the current entry requirements for pharmaceutical services. Someone might set up an LPS scheme, and then three months later abandon it and go back to the national contract, having evaded the rules. LPS will require a slightly different approach to that for PMS. The hon. Member for Runnymede and Weybridge makes a telling point. We cannot expect anyone to make a fairly substantial capital investment in scheme that might run for only three years—or, as proposed in one of the amendments, for only two years. We shall need to address that point.
 I turn next to resale price maintenance. The current hearing on the subject is being led not by the Government, but by the relevant competition authorities. The Government are not involved. The matter was first dealt with by the Office of Fair Trading, and it is now in the hands of the restrictive trade practices court. Our view is that the court is best placed to weigh the matter. What effect, if any, the ending of resale price maintenance will have on pharmacy provision cannot be considered until the court has reached its decision. I understand that the original court proceedings were halted and a new hearing is set to start on 24 April. Once the court has made its ruling, we shall need to consider its implications for the organisation of NHS pharmacy services. It would be premature to speculate on the outcome of the hearing.

Peter Brand: I hear what the Minister says, but it would help if he were to acknowledge that resale price maintenance pays for some of the professional services that are provided by pharmacists. An acknowledgement would help pharmacists, who are anxious about the outcome of the case, because it would be a recognition of the fact that action may have to be taken by the Department rather than by the Office of Fair Trading.

John Denham: I acknowledge those concerns, but in view of the imminent restarting of court proceedings, a ministerial statement of the sort that the hon. Gentleman suggests would probably be unhelpful. Resale price maintenance is a matter for the court to consider, and we shall have to wait for the court to make its decision before considering the implications.
 A number of remarks were made about the various knock-on effects of the provisions. I was asked about additional services that are not directly remunerated. It is a voluntary and discretionary initiative, and health authorities are responsible for handling the development of LPS pilot schemes. We shall discuss later the wider factors that they will need to take into account, including the implications for existing pharmaceutical services, but I do not see why the proposals should lead to anything other than an enhancement of services to patients. Health authorities will be clearly have a role in ensuring that LPS is used effectively as a local strategy.

Philip Hammond: How much additional cost will the change impose on the public purse if resale price maintenance is not abolished—and how much if it is abolished? Clearly, its abolition will reduce in aggregate the income of community pharmacists, and that money will have to be made up from other sources.

John Denham: I cannot give the hon. Gentleman the answer that he seeks.

Philip Hammond: Cannot, or will not?

John Denham: I cannot. It clearly is not sensible to try to predict in detail the possible consequences of a court hearing that is not due to start until 24 April. Our long-standing system of remuneration is based on the price that the NHS pays for a set of services. I do not think that it is helpful to speculate or anticipate that a different system might be needed in future.
 If an LPS scheme were developed, one would expect the health authority to receive an appropriate sum for the cost of providing the core services through the national contract, with additional services to be paid for by the health authority. However, it is difficult to put a firm figure on the likely costs, because it is difficult to predict the pace at which the schemes will develop. Even two years ago, few would have estimated that PMS pilots would have achieved the popular support among GPs that they have done. 
 It is critical that the health authority contribution to the LPS scheme comes out of the unified budgets at local level. Thus the decision on the sum to be appropriately invested at local level in the development of pharmaceutical services is made locally.

Philip Hammond: The Minister said two things that I may have confused. A few moments ago, he talked as though a grant would be attached to the approval of a pilot, but he then talked about costs coming out of the unified budget. Will specific grants attach to the approval of pilot schemes?

John Denham: We must keep three sums of money in mind. When schemes are running, part of the funding will, appropriately, be money that would otherwise have been in the global sum for pharmaceutical services, as the global sum would have covered the costs of the schemes. A second sum will be provided by the health authority in respect of the local agreement about additional specialist services to be offered. The third sum will be the additional funds that could be put into the initial approval process or set-up costs of LPS. On a later clause, we will discuss the power to make specific provision for the set-up costs of a local pharmaceutical pilot scheme.
 The hon. Member for Runnymede and Weybridge invited me to detail our estimate of the shape of an LPS contract and the system of remuneration at local level, saying that the issue had caused the Committee alarm or distress. He suggested that it may have an element akin to the dispensing fee in the current system, and that there may be specific payments to social services. That is certainly possible, but we have not yet sketched out a model LPS contract. We want to see the proposals of health authorities and the potential providers of the services, and work with them on the details of the schemes. That is prudent and practical. 
 The next issue concerned the role of trusts, especially primary care trusts. The issue of principle is that we should not rule out primary care trust or NHS trust involvement in LPS schemes. In some places, that may be the best way to give local people access to high-quality services on which they would otherwise miss out. Patients will remain free to choose which pharmacy they want to go to, so patient choice is in the system. It is possible, however, to imagine circumstances in which the involvement of an NHS trust or the primary care trust would be the best way of providing a service. For example, a pharmacist post could be based partly in a community pharmacy and partly in an NHS trust. That might make recruiting to a particular geographical location more attractive for a pharmacist than coming into a traditional community trust or working in an NHS trust or primary care trust setting.

Philip Hammond: The Minister made the specific statement that patients will retain the choice of which pharmacist to go to. Will he be clear that that is an absolute commitment, because I could sketch out what may look like logical and plausible pilots, but which would involve electronic transmission of prescriptions, so patients would not have the choice to take their prescriptions to any pharmacist they wished.

John Denham: Patients will be able to go to the pharmacy of their choice, although an LPS scheme might design a particular type of service so that it would make sense, and be more convenient, for the patient to go to a particular pharmacy scheme. That is obviously possible in the design of LPS schemes, but the fundamental position is that patients should be able to take their NHS prescription to the pharmacist of their choice. The hon. Gentleman is perhaps thinking of a system in which an LPS pilot is providing sufferers of a particular condition services that are not generally available. Under those circumstances, it might well make sense for the patient to take advantage of the service that would not be available to them elsewhere. However, that is not the same as saying that they can obtain their NHS prescription from only one specified pharmacist.
 We have made it clear, and no doubt we will discuss this issue again when we deal with electronic transmission of prescriptions, that patients must be able to retain the final choice of pharmacy to dispense their prescription. 
 The hon. Member for the Isle of Wight asked me to deal specifically with GP expenses and whether they adequately cover the type of relationship between a GP practice and a pharmacist that he would like to see. This is not a matter that I have previously been invited to consider in any detail. If he would care to drop me a line, I will do so, but I make no promises, given the usual thorny issues of GP expenses. He is certainly welcome to raise the matter with me. 
 The hon. Gentleman asked me also whether it is our intention that pilots should become permanent. The later clauses deal with that. It is certainly envisaged, as it has been with PMS and PDS, that both individual pilots and the general provision of LPS should become permanent arrangements, so the early pilots may became permanent arrangements, subject to review and evaluation. 
 Similarly, the ability to use LPS would become part of the local health authority's armoury, without the need to refer to the Secretary of State, as in the pilot scheme process. That is some way down the line. The hon. Gentleman will know that we have not reached that stage with PMS yet, although we are using pilots quite widely and it is envisaged in the Bill.

Peter Brand: I raised a small point about the role of hospital pharmacies, especially in out-of-hours prescribing. I should like the Minister to respond to the anxieties that have been expressed. Will that facility no longer be available, or should it be encouraged?

John Denham: Certainly we are keen to see better and more sensible means of access to out-of-hours dispensing. It is a bizarre part of the NHS that the approved method of finding out which pharmacy is open out of hours is to ring the police. The fact that that was the best we could come up with caused some surprise the other day among some American visitors to this country who a member of the Conservative party put in touch with me. In the near future, NHS Direct will be able to play that role, which is rather more appropriate—[Interruption.] If the hon. Member for Runnymede and Weybridge rings 999 to find out whether the pharmacy is open, perhaps he is not making the best use of the emergency services—unless he does so in an emergency, of course.
 If the hon. Member for Isle of Wight was suggesting that an aspect of the provisions that we are considering would lead to a reduction in the service provided by hospitals, I cannot see his point.

Peter Brand: The point is that at present it is assumed that pharmacies will volunteer to provide adequate out-of-hours cover. That is done on an ad hoc basis and no health authority can require them to open, yet alternatives are not readily available. Perhaps the Minister should deal with that issue.

John Denham: Two issues arise from what the hon. Gentleman has said. One is that LPS provides a way of improving out-of-hours services. Clearly, we should discuss those services with the profession as part of the wider discussion of the national contract, in which we want improvements.

Peter Brand: Theoretically, would it be possible for a pharmacist employed by a primary care trust to apply to operate as a limited pilot in the provision of out-of-hours services?

John Denham: It would certainly be theoretically possible for an NHS trust to enter into an LPS contract with the health authority to provide an out-of-hours service.
 It should be acknowledged that in the past two years the co-ordination of out-of-hours provision, particularly in winter, has greatly improved. Local pharmacists have often been actively involved in local winter planning groups, which did not happen previously. However, there are still aspects of the system that need to be sorted out.

George Young: The Minister has been helpful in sketching in details of how the brave new world will operate. However, in a 20-page document a passing reference could have been made to the role of dispensing GPs, from whom 3.5 million people receive their prescriptions. An issue of joined-up government is involved. The Department of the Environment, Transport and the Regions is doing all that it can to minimise the number of journeys. The preferred model outlined by the Minister involves a medical centre underpinned by a range of community pharmacists. The hon. Member for Isle of Wight told us that the nearest pharmacist to his practice was three miles away. Inevitably, the approach that has been identified will lead to more journeys.

Peter Brand: I also said that we arranged a collection service for our patients, so that while the prescriptions and pills had to travel the three miles, the patients could stay in their home village.
 Sir George Young: I am not sure whether that desirable service is available to all the hon. Gentleman's patients, or whether his explanation fully deals with my point about the number of journeys. I still maintain that if medicine were dispensed where it was prescribed, fewer journeys would be made overall. However, underpinning that is another point, which is that many patients prefer to collect medicine from the doctor. A journey of three miles might be inconvenient to them. 
 An even better model than that outlined by the Minister is one in which there are medical centres and a range of community pharmacists, and doctors can dispense if they want to. That choice, except in a controlled area, is not available to them in the model before us. Nothing that the Minister said raised my hopes about the prospect of change. I have heard many reasons for a Minister's inability to respond to a Committee. Normally, the Minister does not know the answer. In this case, he told us that he knew the answer, but that the parties involved had urged him not to give it, which is a new and ingenious response. 
 The Minister explained that GPs cannot apply for LPS, because they can knock at another door: they can apply to provide pharmaceutical services under PMS. That raises the issue of how the two schemes are to be integrated. In a given area, there may be a pharmacist who has read ``Pharmacy in the Future'' and the Bill and wants to apply for a pilot scheme and provide a range of services, and a GP who has read the Bill, but despite the powerful speech by Sir George, is not allowed to apply for LPS. The GP knocks on the door of PMS and undertakes to provide a range of services similar to those that the pharmacist is planning to provide under LPS. How will those two be integrated? How will we ensure that we do not get two pilot schemes in the same area, operating under different regimes? It would be tidier to allow the GP to apply under LPS to provide pharmaceutical services, rather than under PMS. 
 The Minister did not really answer the question about integration and how one avoids overlap and confusion caused by having two separate routes to the same destination. I hope that he is both able and allowed to respond to my point. The proposed system is untidy, and may lead to allegations of a less-than-even playing field if GPs are denied the right to apply for a pilot scheme under LPS.

John Denham: I hope that I will not appear in ``Erskine May'' as having invented a new kind of response for Ministers. The disputes between the professions have been rumbling on since 1911. If they are working closely together towards a solution, I would rather respect their wishes and find a satisfactory way forward.
 We would like patients to have the full skills of a pharmacist available to them, as well as those of a doctor. However, we acknowledge that there is support for dispensing practices in areas where full community pharmacy services cannot be made available. 
 GPs who are trying to develop innovative services can do so under PMS. A PMS practice may employ a pharmacist under a PMS contract. The issue of duplication will have to be dealt with when both PMS and LPS are moving towards a permanent regime. However, the current piloting system--especially given the central role of the health authority in both PMS and LPS schemes--provides an adequate mechanism to ensure that there is no duplication of activities in a given area. Although I understand the fears raised by the right hon. Gentleman, I am not convinced that they are quite as powerful as he has suggested. 
 Amendment agreed to. 
 Amendment made: No. 207, in page 30, line 4, leave out from beginning to end of line 8 and insert— 
 `( ) ``Practitioner dispensing services'' means the provision of drugs, medicines or listed appliances (within the meaning of section 41 of the 1977 Act) by a medical practitioner or dental practitioner to a patient of his pursuant to arrangements made by virtue of section 43(1) of the 1977 Act.'.—[Mr. Denham.]
 Clause 29, as amended, ordered to stand part of the Bill. 
 Clause 30 ordered to stand part of the Bill.

Schedule 2 - Pilot schemes

John Denham: I beg to move, amendment No. 218, in page 60, line 19, leave out
`as to the circumstances in which a Health Authority must'
 and insert 
`requiring a Health Authority to'.

David Madel: With this it will be convenient to take the following: Amendment No. 219, in page 61, line 17, at end insert—
 `( ) Sub-paragraphs (3) to (6) of paragraph 2 apply in relation to an application for preliminary approval of proposals under this paragraph as they apply in relation to proposals under that paragraph.
Effect of proposals on existing services
 . —(1) Proposals for a pilot scheme submitted under paragraph 2, or included in an application for preliminary approval of proposals under paragraph 4, must include—
(a) an assessment by the Health Authority of the likely effect of the implementation of the proposals in the Health Authority's area on the services mentioned in sub-paragraph (2);
(b) any assessment supplied to the Health Authority by another Health Authority under sub-paragraph (4).
 (2) The services are—
(a) pharmaceutical services (within the meaning of section 41 of the 1977 Act);
(b) local pharmaceutical services provided under existing pilot schemes or LPS schemes (within the meaning of Schedule 8A to the 1977 Act);
(c) general medical services provided under arrangements made under section 29(1) of the 1977 Act;
(d) personal medical services provided under arrangements made under section 28C of the 1977 Act or under pilot schemes made under section 1 of the National Health Service (Primary Care) Act 1997.
 (3) If it appears to a Health Authority that the proposals would, if implemented, affect any of the services mentioned in sub-paragraph (2) provided in the area of another Health Authority, they must consult that other Health Authority about the proposals before submitting them under paragraph 2 or including them in an application for preliminary approval under paragraph 4.
 (4) A Health Authority consulted under sub-paragraph (3) must prepare an assessment of the likely effect of the implementation of the proposals on those services and supply it to the Health Authority which consulted them.'.
 Amendment (a), at end of amendment No. 219, insert— 
`(e) the provision of retail pharmacy services for the supply of non-prescription medicines.'.

John Denham: This schedule deals with the detailed arrangements by which proposals for pilot schemes are to be developed and approved. It also covers the steps to be taken once schemes have been approved. For the most part the provisions are modelled on those that have been successfully used for personal medical and personal dental services. However, there are some noteworthy differences. First, we have decided that prospective providers of LPS services should not have an absolute right to demand that health authorities work up and submit their proposals. That is because anyone can own a pharmacy, so in practical terms the potential pool of applicants was too large for the PMS approach to be viable. Health authorities could be swamped with propositions from all over their area and all over the country. There was also a risk that people would see this as a way of getting round existing control of entry rules, rather than as an exercise to develop genuinely innovative schemes.
 We believe that there should be a safeguard against health authorities that deliberately or inadvertently hold back good ideas. That is why we have included specific powers for the Secretary of State and the National Assembly for Wales to require health authorities to provide details of ideas put to them by prospective pilot scheme participants. If necessary, health authorities could be directed to work up and submit such ideas. 
 Government amendment No. 218 clarifies that such directions may deal either with particular cases or impose a more general requirement.We have also introduced the concept of preliminary approval. Health authorities could identify situations in which an LPS pilot scheme would be an ideal way of filling a gap or otherwise promoting access to high-quality services, such as the opening of a new one-stop primary care centre. It could also be part of the strategy to develop new services in areas of social deprivation. 
 Preliminary approval will allow health authorities to work up proposals for LPS schemes without having definitely identified a particular person or organisation to provide the services. Having received preliminary approval from the Secretary of State or the National Assembly for Wales--the relevant authority as identified in clause 62--they would be able to seek offers from people wanting to participate. Whether or not they go through the preliminary approval stage, we expect all proposals for pilot schemes to be the product of full local involvement and discussion. We are taking a specific power to require health authorities to conduct formal consultations in paragraph 2(4) of the schedule. 
 We will naturally expect the proposals to be accompanied by a full and honest assessment not only of the likely benefits, but of the effect on existing services, especially pharmacy and GP services. I know that the pharmaceutical services negotiating committee and the general practitioners committee of the British Medical Association were both keen to see a provision in the Bill to that effect, and we have introduced Government amendment No. 219 in response to their concerns. It explicitly requires health authorities to assess the effects of their proposals on the overall provision of pharmaceutical services and on general and personal medical services. They must consult with neighbouring health authorities if necessary, to ensure that the assessment is not arbitrarily restricted by administrative boundaries. The assessment must then be included in the proposals submitted for approval by Ministers. Naturally, we will pay close attention to the assessment, and we will expect health authorities to consult widely and thoroughly in drawing up their assessment. 
 Amendment No. 219 also clarifies that requirement, and the other direction-making powers in paragraph 2 apply to both full and preliminary applications. 
 Opposition amendment (a) to Government amendment No. 219 would add to the matters to be covered in health authorities' assessments the effect of the provision of retail pharmacy services on the supply of non-prescription medicines. I am happy to acknowledge the importance of people having ready access to retail supply of non-prescription medicines. That aspect of the role of community pharmacists was highlighted in ``Pharmacy in the Future''. Pharmacists are well placed to help people to cope with everyday health problems. As I mentioned earlier, the ``ask your pharmacist'' message has been a strong part of the Government information campaigns during the past two winters. 
 We want more medicines to be available for retail sale where this is safe and appropriate, so we expect that pharmacies will have a growing range of medicines to offer people. The Medicines Control Agency will shortly be holding a meeting with interested parties to consider how that can best be achieved. We are developing the links between NHS Direct and community pharmacy, and by 2002 all NHS Direct sites will be able to refer callers to their local pharmacy where appropriate. 
 I listed those measures to reassure the Committee that I have no quarrel with the sentiments behind amendment (a). However, it is unnecessary. A few pharmacies do not provide NHS dispensing services, but in the overwhelming majority of cases pharmacies both dispense and sell medicines. Any assessment of the impact on pharmaceutical services as currently provided and on local pharmaceutical services as provided for in the Bill will inevitably deal with the availability of over-the-counter non-prescription medicines. Given that some pharmacies exist without NHS business, the only danger is that assessments will exaggerate any undesirable effects on that aspect of community pharmacy. 
 Clearly a balance must be struck between patients having ready access to their medicines after they have seen their GP—nobody would dispute that patients value that—and ready access to over-the-counter medicines when people are out shopping for other things. That will be covered by any assessment of the impact on pharmaceutical services, as that will look into the effect on existing service providers and possible changes in the pattern of services. Therefore, I am not convinced of the need for the amendment, and I ask the Committee to resist it.

Philip Hammond: So far we have taken an hour and 25 minutes to cover two clauses. We have 19 clauses to cover today, but thanks to the Government's timetabling arrangements we do not have much time to do it in, so I shall attempt to be brief.

David Jamieson: We can go to 10 o'clock tonight.

Philip Hammond: The Government Whip says that we can go to 10 o'clock tonight. Is that a formal proposal that the Programming Sub-Committee should sit and change the timetable that has been imposed on the Committee? I am happy to give way to the hon. Gentleman if he wants to put that proposal, but my understanding is that we have to finish at 5 pm under the terms of the programming resolution.
 The Minister has outlined what our proposed amendment to the Government's amendment No. 219 seeks to do. I spoke earlier about our concern that arrangements under the Bill could, by allowing dispensing to be handled by a hospital pharmacy, have an unintended negative impact on the availability of over-the-counter medicines and non-medicinal products typically sold in pharmacies. We sought to write into amendment No. 219 a requirement to assess the impact on the provision of those services. The Minister says that the amendment is unnecessary because the required assessment of pharmaceutical services would cover that. I do not agree. The required assessment is an assessment of pharmaceutical services provided under section 41 of the National Health Service Act 1977, which does not include the provision typically made in retail pharmacies incidental to their principal activity of dispensing prescription medicines. 
 It is not clear that a health authority would be required to measure the impact of any proposal on the loss of over-the-counter sales. If a health authority was able to show that the provision of pharmaceutical services as defined in section 41 of the 1977 Act would remain unaltered, there is nothing in the schedule as drafted that would require them to make an assessment of the impact on non-section 41 services, such as the provision of non-prescription medicines. 
 The Minister acknowledged that we would need to know whether the reconfiguration of services would result in the loss of over-the-counter retail opportunities for consumers. He said that it would not necessarily, but I ask him to reflect on that, in the light of the definition of the pharmaceutical services that have to be assessed. We may return to the question in future. 
 Paragraph 4 of schedule 2 deals with preliminary approvals. It provides that even though a health authority has obtained a preliminary approval, it must re-submit the final project proposal for approval by the relevant authority. I gather from the explanatory notes that the process is likely to be one of structuring an outline of the intended pilot and inviting bids from commercial partners to operate the pilot, perhaps from Boots and Sainsbury. 
 It seems inappropriate that the health authority should have to go through a proper, arm's length, objective evaluation process with competing commercial promoters if the relevant authority has the power of veto over what should be an objective commercial bidding process that is undertaken in open and transparent competition. It suggests that closed-door negotiations are more likely than what I would consider to be the proper process, in which the health authority would structure the pilot that it wanted to see in operation, without reference to particular individuals or companies. It would then invite those who are in a position to do so to make bids to provide those services on a non-preferential basis and evaluate the bids objectively. The import of paragraph 4 is that the Government do not intend that. Will the Minister clarify that point?

Peter Brand: This is an interesting schedule. I wonder why it has been determined that the Secretary of State or the Welsh Assembly should have to give permission for that work rather than that the health authority should make its own proposals, with the Secretary of State or the Assembly acting as the court of appeal should a party feel aggrieved by the authority's decision. I fail to see how the Secretary of State can better judge than the health authority what is needed locally. The health authority's commissioning function will be undermined by the authority becoming a mere agent of the Secretary of State.

George Young: I welcome both Government amendments. They bring some order to the almost free-for-all envisaged under paragraphs 4.13 and 4.14 of ``Pharmacy in the Future''. I have one specific request. Amendment No. 219 provides that the health authority should make an assessment of the likely effect of its proposals on existing services and that a copy must be sent to the Secretary of State. Will the Minister ensure that a copy is sent also to the local medical and pharmaceutical committees, so that they too can be confident that a thoroughly informed assessment that takes account of all the local circumstances has been made of the impact of the proposals? I see no reason why those committees should not have a copy. It would enhance confidence in the decision-making process.

John Denham: I shall answer first the hon. Member for Isle of Wight. In common with other personal family health services legislation, it was thought that all pilot schemes should be agreed by the Secretary of State. Both sides in the previous Parliament thought that to be a sensible balance when bringing new elements into established national contractual arrangements. It seemed to provide adequate safeguards on all sides. If everything is successful, as we hope and intend, it is envisaged that permanent arrangements will enable the health authority to take the decisions at local level. We are being prudent, having borne in mind the element of innovation and experiment.
 The hon. Member for Runnymede and Weybridge talked about preliminary approval and the Secretary of State's approval. It is unlikely that there would be changes between the outlying specification set out at preliminary approval stage and the final scheme as a result of discussions from providing parties. We do not envisage that, at preliminary approval stage, the health authority will have a final, detailed and complete specification for every element of the service, against which providers simply submit commercial bids as though it were, say, a building project. That will allow the Secretary of State to pick up significant or problematic variations between preliminary and final approval. 
 In answer to the right hon. Member for North-West Hampshire, there is no reason why health authorities should not share the results of their assessments with local medical committees and pharmaceutical committees. We should deal with the matter in guidance in due course. It is important that people have confidence in the system. 
 The crucial question is whether we need to accept the amendment. Typically, 70 per cent. of the business of a community pharmacy is NHS business. The only danger of our current system is that if it were interpreted as narrowly as the hon. Member for Runnymede and Weybridge suggested, we would consider that 70 per cent. as though it were 100 per cent. of the income, and so overstate rather than understate the impact of an LPS contract to provide NHS services. The LPS contract is, of course, for the provision of NHS services, and we shall consider the impact of the new NHS service on the existing NHS service. 
 The hon. Gentleman said that everything would be okay if one could show that there would be no detrimental effect on NHS business. Obviously, we intend there to be no such effect, but in considering the wider issues of public health interest, the availability of over-the-counter medicines and so on, health authorities would in practice take stock of whether the new LPS provision for NHS services would have any impact on the wider provision for the local community. Although I understand where the hon. Gentleman is coming from, I believe that he is wrong. 
 The hon. Gentleman asked me to consider various matters. I once said that we would consider some matter and was told that, under parliamentary convention, that meant that I would table an amendment about it on Report. Having been caught like that before, I shall not be so caught again, although, as a reasonable man, I shall have a think about these matters. That is no commitment to table amendments on Report.

Philip Hammond: The Minister has accepted that there needs to be an assessment of the impact on over-the-counter sales opportunities. The only issue is whether that needs to be clear in the Bill. I should be grateful if he had a think about that, as it is simply a different interpretation of the narrow duty placed on health authorities by his own amendment.

John Denham: There is nothing further for me to say.
 Amendment agreed to. 
 Amendment made: No. 219, in page 61, line 17, at end insert— 
 `( ) Sub-paragraphs (3) to (6) of paragraph 2 apply in relation to an application for preliminary approval of proposals under this paragraph as they apply in relation to proposals under that paragraph. 
 Effect of proposals on existing services 
 . —(1) Proposals for a pilot scheme submitted under paragraph 2, or included in an application for preliminary approval of proposals under paragraph 4, must include— 
 (a) an assessment by the Health Authority of the likely effect of the implementation of the proposals in the Health Authority's area on the services mentioned in sub-paragraph (2); 
 (b) any assessment supplied to the Health Authority by another Health Authority under sub-paragraph (4). 
 (2) The services are— 
 (a) pharmaceutical services (within the meaning of section 41 of the 1977 Act); 
 (b) local pharmaceutical services provided under existing pilot schemes or LPS schemes (within the meaning of Schedule 8A to the 1977 Act); 
 (c) general medical services provided under arrangements made under section 29(1) of the 1977 Act; 
 (d) personal medical services provided under arrangements made under section 28C of the 1977 Act or under pilot schemes made under section 1 of the National Health Service (Primary Care) Act 1997. 
 (3) If it appears to a Health Authority that the proposals would, if implemented, affect any of the services mentioned in sub-paragraph (2) provided in the area of another Health Authority, they must consult that other Health Authority about the proposals before submitting them under paragraph 2 or including them in an application for preliminary approval under paragraph 4. 
 (4) A Health Authority consulted under sub-paragraph (3) must prepare an assessment of the likely effect of the implementation of the proposals on those services and supply it to the Health Authority which consulted them.'.—[Mr. Denham.]
 Schedule 2, as amended, agreed to.

Clause 31 - Designation of priority neighbourhoodsor premises

John Denham: I beg to move amendment No. 208, in page 30, line 24, leave out from beginning to end of line 25.

David Madel: With this it will be convenient to take Government amendment No. 221.

John Denham: The clause provides a power to make regulations that allow health authorities to designate neighbourhoods and premises for the purpose of local pharmaceutical services pilots. The idea is that the development of LPS is not undermined by the operation of existing national arrangements for pharmaceutical services. If a health authority and its local partners wanted to discuss and prepare pilot schemes, they should have the breathing space to do so, without constantly being faced by the pressure that someone else might apply to open a pharmacy in the same place under the national arrangements.
 Under existing national arrangements, health authorities are obliged to consider applications from people wishing to provide pharmaceutical services in their areas. If the application satisfies certain tests, health authorities have no choice in practice but to grant it, so there clearly could be conflict and disruption between the desire to develop a local pharmaceutical services pilot and an application from a scheme under the national arrangements. 
 With LPS, we want something much more proactive. We want a two-way process in which existing contractors and other prospective pilot scheme participants come forward with ideas that they want to discuss with health authorities, while health authorities will look for opportunities of their own to develop pilots. It would be wasteful if health authorities had to do that and deal with applications to open pharmacies under the national arrangements. 
 There must be limits to such designations. We have no desire to see deliberate or inadvertent planning blights. The clause provides for us to make regulations, rather than conferring the power directly on health authorities. The regulations will be able to set limits on which places may be designated and the period for which designation may be maintained. The clause also ensures that we can take timely action should the designation system be misused. If necessary, the Secretary of State and the National Assembly for Wales will be able to direct a health authority to cancel a designation. 
 On reflection, however, we think that one part of the clause is unnecessary. Its purpose is to allow health authorities to defer part II applications. That is stated explicitly, so we do not think that the further reference to health authorities giving priority to LPS schemes in some other unspecified way is necessary. Amendments Nos. 208 and 221 delete that unnecessary power by deleting the relevant paragraphs. 
 That is probably sufficient introduction for the amendments.

Philip Hammond: I am delighted that the Government tabled the amendment, as the idea of health authorities prioritising pilot services in some unspecified way was alarming. By tabling the amendment, the Minister has saved me working out how to attack paragraph (c).
 Will the Minister to acknowledge the fact that the process of designation causes concern in the same way as paragraph (c) does? Alarmingly, he proposes to interfere with commercial freedom by preventing certain businesses from setting up in an area. Although it is unnecessary to do so, it would be easy to paint a picture of circumstances in which it would be sensible to defer part II applications while the structure of a pilot was put in place. The Minister must recognise the danger of a health authority choosing as its preferred partner a large national pharmacy chain, capital-rich and perhaps proposing a complex deal involving all sorts of glamorous additional benefits to the health authority. The health authority would then be in a position effectively to trade off in a deal with the provider monopoly exclusivity in a particular area. The real concern is that if ``Shoes the Chemist'' makes a deal with the health authority, all potential entrants to an area will be blocked out. 
 I am sure that that is not what the Minister has in mind, but he will have to draft the regulations to ensure that health authorities do not abuse their powers—although I am aware that he has given himself the power to deal with abuses of the system. It would be helpful if he assured the Committee that health authorities would not be allowed to designate an area. He used the term ``breathing space''. In my experience of bureaucratic organisations, their idea of breathing space is a little longer than that of commercial organisations. One can well envisage a health authority breathing a sigh of relief and saying, ``We will designate our entire area, so that we can think about it for two or three years without having to process all the tiresome part II applications, and then see if we can come up with a pilot scheme''. I am sure that the Minister does not intend that to happen, but he must make sure that the power to designate cannot be used as a blocking mechanism or to create blight. We must bear in mind—and this is a familiar theme—that it will have an impact on the provision of services other than pharmaceutical services within the meaning of the Bill because it could prevent retail pharmacies from opening and therefore limit access to over-the-counter products.

John Denham: The hon. Gentleman makes a fair point, although I am sure that he would not suggest that health authorities should be unable to take advantage of the opportunity of significant investment in the development of pharmaceutical services in a particular area if that was to the benefit of patients. However, he is quite right to stress that the power should be used carefully. Health authorities should not prolong designations any longer than necessary nor should they designate a location in the first place unless they are actively considering an LPS scheme. If the scheme came to nothing, we would expect them to cancel the designation.
 It is difficult at present to be sure what the length of designation is likely to be. It will depend to an extent on the cycle in which we invite applications for LPS schemes, so central Government will have an influence on that if we proceed as we did with PMS in inviting several waves of applications. It is unlikely that the period from applications being formally invited to schemes coming into effect will be much more than a year and could well be less. If substantial capital investment is involved, the time scale might be different, but as the hon. Gentleman recognised, we have taken extensive powers to act if there is any evidence to suggest that health authorities deliberately—or otherwise—are misusing the power.

Philip Hammond: I am grateful to the Minister for reassuring the Committee about the Government's intention. There is a slight contradiction between what he said about patients continuing to have the choice as to which pharmacy they take their scrip and the scenario that I outlined that implies that a health authority might effectively make a deal to give one provider predominance in an area. The Minister said that he was sure that I would not want to suggest that anything that produced beneficial investment should be blocked, but that is the argument of the budding monopolist, who would say, ``If you give me a monopoly, I can make a bigger investment.'' I ask the Minister to bear in mind when he makes the regulations that although investment is good in terms of absolute provision, choice is also a good thing.

John Denham: I have said nothing to contradict what I said earlier. If there is an opportunity to get the best possible service—subject to all that I said earlier—it is reasonable that a health authority developing a LPS scheme would want to obtain the best possible service for patients rather than a second-best service.
 Amendment agreed to. 
 Clause 31, as amended, ordered to stand part of the Bill.

Clause 32 - Reviews of pilot schemes

Philip Hammond: I beg to move amendment No. 277, in page 30, line 37, leave out `three' and insert `two'.

David Madel: With this it will be convenient to take amendment No. 276, in page 31, line 4, at end add—
 `(5) The review referred to in this section must include a review of—
(a) the impact of the pilot scheme on patient services, and
(b) the cost effectiveness to the NHS of the pilot scheme, and
(c) the impact of the pilot scheme on retail competition.
 (6) A report detailing the conclusions of every review under this section shall be published by the health authority concerned not less than three months after the completion of the review.'.

Philip Hammond: Clause 32 provides for reviews of pilot schemes. That is progress indeed and has saved me the trouble of drafting an amendment requiring a review and the publication of its results. We are particularly sensitive, as the Minister will know from previous debates, to the speed with which NHS Direct was rolled out, without proper appraisal of its strengths and weaknesses. The review requirement is a good one. Does the Minister expect reviews to be conducted by outside bodies or by health authorities?
 Amendments Nos. 277 and 276 would have quite different effects. Amendment No. 276 would extend the review to cover various areas, one of which we have already discussed—the impact of the pilot scheme on retail competition. It would also require an examination of the cost effectiveness to the NHS of the pilot scheme and its impact on patient services. As guardians of public services and the public purse we would all reasonably expect the review to cover those points. I hope that the Minister will agree in principle that that is necessary. Perhaps he will propose another way to achieve that objective. 
 Amendment No. 277 would reduce from three to two the number of years after which a review should take place. The review might take a little while to complete; amendment No. 276 proposes that a report should be published not less than three months later. If the review process did not start until three years into the scheme, publication might not happen until four years after the scheme got under way. It seems reasonable that the review should begin after the scheme had been in existence two years. That should provide enough data.

Peter Brand: Are we to assume that the retail competition referred to in amendment No. 276 would be restricted to over-the-counter medicines, rather than the wider retail activities of some pharmacists, which should not be of concern to the Committee?

Philip Hammond: No. It is important that we consider the impact of schemes on wider retail competition. If a scheme resulted in the closure of a corner pharmacy that had also been in the habit of providing, say, milk and bread for the local community—although that might be unusual—it would be relevant and would need to be taken into account, because it would affect the community. Many pharmacists provide items ancillary to their principle business, such as baby care products. For someone in an isolated area, the closing down of the only place that sells babies' nappies will be a material consideration.

Peter Brand: I am grateful for, but surprised by, that intervention. I thought that markets would be able to cope with the supply of photographic equipment, sandwiches, clothes or suntan lotions and I do not think that that is a matter for the Department of Health or a local health authority. In view of the hon. Gentleman's clarification, I do not think that I can support amendment No. 276. Amendment No. 277 is probably not necessary.

John Denham: It is important to point out that our approach in clause 32 of reviewing every pilot scheme at least once within three years of its commencement is modelled virtually word for word on the equivalent provisions on personal medical services in the National Health Service (Primary Care) Act 1997. I do not see a fundamental reason to depart from the precedent that has been set for other family health services. The clause leaves the procedure to be determined by the Secretary of State or the National Assembly for Wales, except that it requires the health authority and pilot scheme participants to be offered the opportunity to make their views known, as part of the review. That is clearly only a minimum requirement.
 It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.